East Timor, Home To 'Grandpa Of All Coffee,' Stands To Gain Big From Starbucks

Last month Starbucks Consumer Packaged Goods announced it would be adding coffee from Mount Rameleau in East Timor to be part of its "extraordinary new single-origin coffee" line sold exclusively in super markets.

Timor-Leste, known often in the west as East Timor, is an island nation straddling the Indian and Pacific Oceans. The population of 1.2 million people only became an officially sovereign nation in 2002. For a nation this size and this new to be afforded the global branding power of Starbucks is potentially a huge boost for the economy, tourism and global market awareness.

At 9,721 feet (2,963 meters), Mount Rameleau is the tallest mountain on Timor Island and has its own rich and fertile ecology. In the indigenous language of Tetum, it is called Tata Mailau which literally means: grandfather of all. A 2013 United Nations Development Programme study points out rapid deforestation has been an increasing issue for Timor-Leste recently. This is something that a sustainably sourced and expanding coffee industry may help alleviate. The Natural Resources Defense Council says, "Agro-forestry systems, including those involving coffee, have potential to enhance the economic and ecological stability" of a country.

Andrew Linneman, a 21-year partner at Starbucks, is enthusiastic about the new Mount Rameleau coffee for both consumers and the people of Timor-Leste. He describes the coffee from around Mount Rameleau as "very different" with a "brighter flavor profile" atypical for Asian produced coffee. Having first started sourcing coffee from Timor-Leste in 1996, Mr. Linneman is pleased that Starbucks can now showcase a single-origin coffee from the region. As Starbucks' Vice-President of Global Coffee Quality and Engagement, he says the new Mount Rameleau coffee is a "great acknowledgement of the job the East Timor government and our farmers' have done to improve infrastructure and the supply chain."

Mount Rameleau coffee by Starbucks in its package and ready to drink. (Photo: Starbucks Coffee Company)

As a 2013 report noted, "46 percent of East Timorese households rely solely on coffee for their income." A 44-page study on Improving the Lot of the Farmer in Timor-Leste by Sweden's Research Institute of Industrial Economics in 2012 found that infrastructure, outdated mills, and other technical issues were holding back the coffee industry in Timor-Leste. It cites other studies from the World Bank that with investment and updating, gross margins could increase nearly four-fold and returns per labor day could increase in excess of 50%. The Research Institute of Industrial Economics report, which was published two years prior to Starbucks' launch of the single-origin coffee, concluded that Starbucks' presence and its marketing of the country's coffee was highly influential:

Coffee is the main cash crop in Timor-Leste and it is also the country’s main export good...Around 67,000 households grew coffee in 2009... So far, exports have predominantly targeted high-quality niches in foreign markets. The decision by Starbucks to sell coffee from Timor-Leste has provided a major boost to the reputation of the product and has opened a large potential market.

A weigh station for coffee in Timor-Leste (Photo: Eco Discovery Timor-Leste)

Mr. Linneman says there are about 22,000 farmers in the co-operative that supplies Starbucks from Timor-Leste. He looks forward to the new Mount Rameleau single-origin coffee "elevating our customer experience." By the same token, he stresses the importance of Coffee And Farmer Equity (CAFE) practices Starbucks employs in all 28 countries from which it sources coffee. These practices include environmental and social programs. For example, there are 20 mobile health clinics and 9 fixed location health clinics for farmers working for Starbucks' co-operative partners in Timor-Leste that Starbucks helps to pay for. Mr. Linneman stresses, "Our success is linked to the success of our farmers... We want to provide stability for our farmers so that we can produce our products reliably for our consumers, and reliably for our farmers" livelihood.

Manny Napoleon, Operations Manager at Eco Discovery Timor-Leste, a local tourism agency agrees with the Research Institute of Industrial Economics:

While oil is our country's most important economic export, our total exports of coffee is crucial to the country’s overall economy, and our second best source of foreign exchange. As the quality of the coffee is improved so will our international reputation, especially with the brand power of names like Starbucks.

Mr. Napoleon anticipates Timor-Leste coffee production increasing. He also looks forward to an increase in tourism from Starbucks' global brand and its marketing of East Timor. He says, "We believe that the organic coffee industry in the long term will definitely generate a lot of interest especially in the tourism market. As tour operators, we have taken this industry very seriously and we will be featuring coffee-related tours in-season that will be promoted next year."

In brief, buying a package of Starbucks new single-origin Mount Rameleau coffee has the potential to:

taste great

improve local wages

improve local infrastructure

protect local ecology

increase global awareness of a nation only sovereign since 2002

and increase local tourism.

While this may be a good product for Starbucks, it also shows the hugely beneficial win-win situations that corporately responsible global brands can provide to developing economies. Starbucks has been sourcing coffee from Timor-Leste since before it became independent from Indonesia in 1999 and became a recognized sovereign nation in 2002. Whether by design or not, Starbucks' branding power has been tied to growing Timor-Leste's economy as long as the country has existed. Look for Mount Rameleau single-origin coffee in your supermarket and experience a unique flavor that is changing people's lives.

I have been published in the UB Post and a frequent contributor to Seeking Alpha in the past. Frontier and emerging markets research and writing is my work, with a focus on Asian economies. I have chaired and moderated conferences related to emerging markets and economies i...